The M.&.A. Predators at Michael Milken’s Ball

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Former Treasury chiefs Henry Paulson, left, and Robert Rubin.CreditMario Anzuoni/Reuters

By Jeffrey Goldfarb

April 29, 2015

Michael R. Milken’s latest ball was notable for its lack of predators.

The financial elite prowling the Beverly Hilton at the behest of Mr. Milken, the former Drexel Burnham Lambert boss, complained about a broad range of things, like a slowing China, hacking threats and stock price valuations. Three former Treasury secretaries lamented a dysfunctional Washington. Among the deal makers in attendance, however, animal spirits ran unanimously wild.

Sessions at the Milken Institute Global Conference like “Reform in China: Growing Pains for a Global Power” and “Cyber-Security: Protecting Companies and Citizens from Assault” lived up to their ominous-sounding billing. Fears about Greece, Europe, emerging markets and the Federal Reserve’s uncharted path out of its longstanding zero-interest rate policy also wafted throughout the halls and ballrooms of the same Beverly Hilton where the junk-bond king once hosted his Predators’ Ball in the 1980s.

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Timothy Geithner, a former Treasury secretary, and Sheryl Sandberg, a Facebook executive.CreditMario Anzuoni/Reuters

Even an upbeat Sheryl Sandberg failed to keep the marquee event from degenerating into a therapy session on American political dysfunction. “Our world needs America to be America again,” said Robert E. Rubin, one of the trio of former Treasury chiefs on stage with Ms. Sandberg, Facebook’s chief operating officer, who moderated the discussion. “The biggest risks to our relative position in the world are in Washington,” echoed Timothy F. Geithner. Henry M. Paulson added: “We can’t be successful as 4 percent of the world’s population if we’re not looking to do business with the other 96 percent.”

Deal makers were resoundingly more bullish. There was little “bust” or “risk” invoked in the “Boom or Bust: Opportunities and Risk in M&A” panel, and far more use of words such as “robust” and “very optimistic.”

Steve Krouskos, a senior EY executive, said 56 percent of about 1,600 C-suite denizens his firm polled expect to do a deal in the next 12 months, compared with a typical rate in the mid-30s. Citigroup’s investment banking boss, Raymond McGuire, said: “All the data would suggest that with the confidence level that exists in the mindsets of C.E.O.s that this is going to continue for a while.” Added his counterpart at Goldman Sachs, David M. Solomon: “At the moment, the market is rewarding people for buying growth, which creates a virtuous cycle of more confidence.”

Buyout barons, however, fell in with the cautious tone of the conference. The Apollo Global Management chief executive, Leon Black, for example, said over the last two years, his firm had sold about four times as much as it had bought and cautioned that “markets across the board are priced to perfection.” TPG’s Jim Coulter said private equity simply would have to play the hand it was dealt: in his assessment, a pair of sixes. Those are lousy cards against corporate buyers playing so aggressively.

Jeffrey Goldfarb is United States editor at Reuters Breakingviews. For more independent commentary and analysis, visit breakingviews.com.

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